Why chase U.S. financing? Conservative Canadian investors are slow to step up

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Financial Post | Quentin Casey | July 23, 2014

Extreme Startups - Marcus DanielsAmanda Parker’s mobile advertising startup has some initial revenue, and its product has been used by big name companies such as Pepsi, Twentieth Century Fox, Molson and Volkswagen. Looking to capitalize on Uplette’s initial momentum, she is working to expand the four-person company with new developers and salespeople. That expansion requires cash.

“We’re in heavy-duty fundraising mode,” said Ms. Parker, Uplette’s co-founder and chief executive.

The Toronto-based company is seeking $750,000, and Ms. Parker anticipates most of that will flow from U.S. investors. “I’d love to have a Canadian investor on board. However, it just doesn’t look like that’s going to happen,” she said.

“We have far more interest and traction in the United States right now. And investors there are far more willing to commit.”

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Ms. Parker’s experience is common among startups seeking much-needed investor cash: Funding in the U.S., for those ambitious enough to seek it, is usually easier to nab. It also comes with experience, networks and connections that Canadian money often doesn’t have.

How can Canadian startups access that valuable funding? Step one: make sure your passport is valid and get down to the United States.

Earlier this year, Ms. Parker received $4,000 from the Canadian Digital Media Network’s Soft-Landing Program. The funds allowed her to spend six weeks in New York, the ad agency capital of the world. There she met many potential clients and investors.

“We would never have the growth we have to date if we had stayed in Canada. We’d be in Toronto still begging for money.”

Her pitch was often met with enthusiasm — and a cheque. “You start the due diligence process almost immediately because their decision making process is a lot faster and they’re far more aggressive,” she said.

That experience hasn’t been mirrored in Canada. Many potential Canadian investors, she said, were uninterested in Uplette, and appeared unlikely to part with their cash, regardless of her pitch. “I call those investors window shoppers. They’re looking around to see what’s happening in the industry, but they’re not actually writing cheques.”

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